Daily Voice: Govt to unveil surgical measures to offset Trump tariffs, support affected industries, says Sandeep Bagla of TRUST MF

GST reforms in form of rate rationalization will reduce the price to the end consumer and should result in an increase in demand and volumes over the medium term. While margins for corporates are not expected to go up, the total profits can be expected to go up. Ceteris paribus, it is expected that corporate profits for many companies can be expected to move up. There could be other factors dictating demand growth as well, but the GST measures will definitely push up the volume growth.

Are you planning to maintain a strong focus on the consumption sector in your portfolio following the rationalisation of GST slabs?

At TRUST MF, we have been a strong believer in India’s demographic dividend and our portfolios have been positioned to benefit from the resilience and recovery of the domestic economy. The GST reforms will provide a further boost to the local consumption oriented stocks.

There have been other measures like lowering of interest rates, improvement in domestic liquidity and more money in the hands of the consumer earlier. We plan to maintain or increase our focus on the consumption sector in our portfolio.

Do you anticipate further policy measures from the government aimed at boosting the economy and mitigating the impact of tariffs?

Indians have proved to be great adapters and improvisors in the recent past. We have seen greater adoption of digital systems in the aftermath of Covid days. We do expect that Government will take further steps to minimize the impact of tariffs and undertake surgical measures like targeted PLI schemes to further boost the affected industries and sectors.

Do you expect President Trump to reduce tariff rates on Indian goods in the coming weeks?

We do expect some resolution to the current tariff impasse facing the country. Trade negotiations can take time, but there should be light at the end of the tunnel. However, tariffs are economically inefficient and are likely to fuel global inflation if they persist for a long period of time. It is step back for trade relations and should be minimized to ensure that benefits of competitive advantaged are not wasted away.

Do you think the resolution of the US-India tariff issue will lead to a significant shift in the stance of Foreign Institutional Investors (FIIs) towards India?

Uncertainty over tariff imposition and resultant trade disruptions is a real problem and act as a deterrent for current commerce volumes and additions to future capacity as well. A dent in the prospects of a few businesses has severely impacted the investor sentiment. Clarity or resolution over the tariff situation should improve the FPI sentiment a bit.

Is India transitioning from being a nation of savers to a nation of investors? Also, do you foresee a new leg of market uptrend emerging now?

India has already transformed from a nation of savers to investors. There are pockets in South or East which are still a bit more conservative. There should be a healthy asset allocation at all points, but the trend towards higher equity allocation in portfolios is likely to continue.

A leg up in the market would be more dependent on the earning visibility of the corporate sector and reduction in global uncertainties.

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